Not all gifts received are liable to pay tax under Income tax Act 1961. However, the Income Tax Act, 1961 includes key provisions which allow you to receive various tax-exempt gifts In India. If an individual/HUF received a sum of money without consideration is chargeable to tax only if the total value of such gift exceeds 50000. If any gifts received from any of the relatives (relatives as per income tax Act) are not taxable under the provisions of Income Tax Act.
Tax Provision in case of Gifts valued up to the limit
Gifts valued up to 50000 are exempt from tax under income Tax Act, However if you receive any gifts higher than the limit of 50000, The Entire amount will be taxable under income from other sources.
If an individual receives any gift valued at Rs 60000 from his friend, (other than relatives) the entire amount of Rs 60000 would be added to taxable income and taxed .
Tax treatment of gifts received as jewellery
The aggregate fair market value of the jewellery received by an individual or HUF during the financial year exceeds ₹ 50000 then the total value of jewellery should be chargeable to Tax.
If an individual received a gift of jewellery from his friends, the total value of jewellery received during the year amounted to Rs.90000 in this case the total value of jewellery exceeds 50000 and hence 90000 will be chargeable to tax.
From the income tax point of view gift can be classified as follows:
1.Movable properties received as gift for less than its fair market value (movable properties received at a reduced price are considered as gifts).
2.Movable property received without consideration.
3.Immovable property received without consideration.
4.Immovable property received at reduced price ( The immovable properties received for less than its stamp duty value)
5.Monetary gift received without consideration
Gifts received on the occasion of marriage
Gifts received on the occasion of marriage of the individual is not chargeable to tax. Gifts received on any other occasions like birthday, anniversary etc. are chargeable to income tax
Relative as per Income Tax Act.
Under income tax Act relatives in case of an individual includes the following persons:
a.Spouse
- Brother or sister
c.Brother or sister of the spouse
d.Brother or sister of the parents
- Any of his grandparents
- Grandparents of the spouse
Gifts by a resident person to a non-resident are deemed to be accrued or arise in India and if the value of such gift exceeds Rs.50000 it is taxable in India in the hands of the receiver.
FAQ’s
1.Is gift income exempt from tax in india
If a person receives Gifts (cash or in kind) from any person, income tax would be liable to be paid by the person who is receiving the gifts. The income would be taxable in the corresponding financial year in which the gift is received and taxable under the head of income from other sources.
2.How much gifts are valued tax free in India?
If a person receives gifts or cash of up to Rs. 50,000 in a financial year, he is not liable to pay any gift tax on it.
- Is money received from the brother or sister of the spouse of the individual is chargeable to tax?
Gifts received from relatives are not taxable as per income tax act. Brother or sister of the spouse of an individual is a relative as defined under income tax act.
- If the aggregate value of gifts received during the financial year exceeds Rs.50000/- how much will be chargeable to tax?
Total value of all such gifts shall be chargeable to income tax act and not just the value in excess of Rs.50000/-.
5.’Immovable property received without consideration on the occasion of the birthday of an individual is chargeable to tax’. True or False?
True, Immovable property received without consideration on the occasion of birthday shall be chargeable to tax if the value of the property exceeds Rs.50000. Only the gifts received on the occasion of marriage of an individual are exempted from income tax.
- Whether a gift of a motor car received by an individual from his friend is chargeable to tax?
As per the description given under the income tax act for the movable property, a car is not included as moveable property. Therefore the gift of car received by the individual shall not be chargeable to tax even if the value of the car exceeds Rs.50000/-
